Solutia, Banks, Spar in Court Over Bankruptcy Loan

New York, NY, February 22, 2008--Solutia's three bankruptcy lenders decided independently to pull out of a commitment to fund the company's $2 billion exit loan based on credit market conditions, a lawyer for the lenders said in court.

Attorney D.J. Baker refuted Solutia's claims that New York-based Citigroup may have led the decision to withdraw. The banks, Citigroup Inc., Goldman Sachs Group Inc. and Deutsche Bank AG, each decided on their own to back out because of market changes, Baker said in U.S. Bankruptcy Court.

Solutia is seeking to force the banks to fund the loan or pay $2.25 billion in damages.

"Every one of these three lenders made a careful, independent and thoughtful analysis before they decided to take the very dramatic step of deciding Solutia hadn't satisfied the conditions for the loan to close," Baker said.

Solutia accuses Citigroup Chief Executive Vikram Pandit of making the decision to pull out of the loan.

Solutia and the banks disagree over whether deterioration in the credit markets was predictable based on the subprime market crisis that began in mid 2007.

Solutia said it was assured that if the banks couldn't syndicate the loan, they would hold it on their balance sheets themselves.

Solutia CEO Jeffrey Quinn testified that the loan was a "firm commitment." Without the loan, Solutia's $250 equity million rights offering will expire Feb. 28, and "the plan begins to crumble," he said.